Review of Procurement, Invoicing, PWP’s, and 2 CFR 200 for RPO’s and MPO’s.Daryl Vreeland October 12 and 15, 2020Transportation Planning Division

Presentation sections

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RPO’s skip this section

Intro note• Everything in this presentation applies to RPO’s and

MPO’s!• RPO’s (and MPO’s < 200k population) simply ignore

the section detailing STBG-DA funds. – DA funds are only available to MPO’s over 200k in population.

• MPO’s and RPO’s are used interchangeably throughout this presentation.

• For more info, please refer to the RPO administrative procedures manual or MPO administration documents.

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Objectives• To provide guidance, education, support, and direction

to ensure non-federal entities (LPA’s of RPO’s/MPO’s) follow applicable requirements and guidelines

• To expedite reimbursements to non-federal entities • To ensure reimbursements are documented properly to

withstand third-party scrutiny. (i.e. audits)• To achieve consistency among recipients of federal

funds.

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Purpose• Provide review and resources (links) for MPO and RPO

use in:• Procurement• Invoicing• PWP• Remember your yearly Indirect cost allocation plan• For applicable MPO’s: STBG-DA

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Big Picture• Those receiving Federal funds are responsible for

following state and federal regulations.• Remember to properly document. • Keep records for longer than you think.• Audits occur years after you’ve finished a study/project. • Regulations define Improper payment as: (click to go to reg)

– “…any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper”.

• If auditor discovers improper payment, LPA must pay that back to NCDOT.

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What is 2 CFR 200?• 2 CFR 200 (Updated sections to 2 CFR 200)

– UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS

– Formerly: • 44 CFR PART 13 • 2 CFR 225 Cost Principles for State and Locals • OMB Circulars A-87, A-102, A-133 • Federal Program Guidelines

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Update to 2 CFR 200• Amended August 13, 2020.• Amendment is published in Federal Register• You may need to cross-reference the amendments

(manually). Here is the currently-published version.• Click on the link to the amendment to be sure.

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Click on this

Be sure to reference the Amendments

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NEW (amended) VERSIONOutdated Version(no Aug, 2020 amendments)

Some other new sections

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2 CFR 200 – manually check update• August 13, 2020 update to 2 CFR 200. (PDF)• ECFR (Amendment portion only)

• Where’s 200.215? You must check manually (until these discrepancies get fixed…)

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Among the updated sections…• 200.318 – General procurement standards

– The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section,

• 200.320 Methods of procurement to be followed

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Among the updated, part 2• 200.215 – Never contract with the enemy

• 200.216 - Prohibition on certain telecommunications and video surveillance services or equipment– telecommunications equipment produced by Huawei

Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such entities)

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Among the updated, part 3• 200.322 Domestic preferences for procurements

– (a) As appropriate and to the extent consistent with law, the non-Federal entity should, to the greatest extent practicable under a Federal award, provide a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States

• 200.414 Indirect (F&A) costs

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FHWA guidance regarding this update• Currently awaiting additional FHWA-specific guidance

regarding the August 13, 2020 update to 2 CFR 200.

• Redlined reference document (not OMB guidance).– From performance.gov

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PROCUREMENT

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MPO/RPO process to hire a consultant• This presentation is a brief overview.• The fully detailed process can be found in TPD’s

procurement process for MPO/RPO’s

• “If one of the MPO’s <or RPO’s> member agencies is carrying out the work, it is the responsibility of the LPA to ensure this process is followed”

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If non-LPA will procure work• Best practice: Have an interlocal agreement between

LPA and Town/non-LPA member organization• Establishes reimbursement protocol (between LPA and

Town), and• Clarifies legal responsibilities

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Non-LPA-led work -- payment flows• Town(non-LPA) pays 100% ($100k) of study cost

– (let’s assume 80%/20% for this example)• Town would request/invoice 80% ($80k) reimbursement

from LPA quarterly (or monthly, etc).• LPA pays Town the 80% ($80k) reimbursement.• LPA invoices NCDOT for that 80% ($80k) amount paid

to the Town in the regular quarterly invoice.– Be sure not to reduce amount requested by another 80%.

• You want the full 80% ($80k) back, not 80% of the 80% ($64k) requested.

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TPD’s procurement procedurefor MPO’s and RPO’s.

• Following TPD’s procedure ensures compliance with applicable State and Federal requirements regarding procurement of Private Engineering Firms.

• Involve TPD coordinator every step of the way– Includes OIG review of DRAFT contract

• reviews pay rates, overhead rates and other non-salary costs included in the consultant contracts.

• Your TPD contact will coordinate the review.– Make sure prime and ALL subs are prequalified.

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PEF procurement Process1. LPA notify TPD coordinator of intent to acquire PEF.2. TPD coordinator to verify project is in adopted UPWP

with sufficient funds. a) MPO to involve TPD coordinator in consultant selection

process/ committee3. LPA submit draft RFLOI to TPD coordinator4. TPD to review RFLOI 5. TPD give approval to MPO staff to advertise work

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PEF Process, page 25. (con’t) If work is less than $50k, then LPA doesn’t need

to formally advertise, but still must target a pool of 5-6 prequalified firms and request proposals/letters of interest.

6. LPA staff transmits copy of proposals received to TPD coordinator for their review. (TPD staff are selection committee members)

7. TPD coordinator verifies prequalification status of firms for the work tasks identified.

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PEF Process, page 38. MPO/RPO Staff schedules PEF selection meeting.9. PEF selection is made.

a) If service is for contracting out MPO operations, agreement shall not exceed a 2-year contractual period. Must be re-advertised every 2 years.

10. a) MPO/RPO staff to submit draft contract, scope, manhours, etc to TPD coordinator.

b) TPD Coordinator to email package to OIG for their review. OIG to review overhead, pay rates, other non-salary costs, etc.

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Process, page 4c. After OIG review, TPD coordinator to transmit

Consultant Approval Memoi. TPD may approve, approve with comments, or not approve.ii. If OIG has comments that need addressing, TPD

coordinator may email LPA to address comments, and submit revised contract/cost proposal.

11. LPA to transmit executed contract to TPD coordinator.

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Process, page 512.TPD coordinator to submit to Planning Unit Head the

following for entry into SAP:– Executed contract– OIG review letter– TPD’s Consultant Approval letter

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NCDOT Integrated Project Delivery (IPD)

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Professional Engineering Firm Management - Guidance for Project Managers

• The purpose of this document is to introduce new Project Managers with the Department to the basic concepts of PEF management

On-call contracts• On-call contracts or limited service agreements

(example: planning services on-call) shall not exceed 5 years.

• This includes the initial period plus all possible contract extensions.

• 23 CFR 172.9 (a) (3) (i)

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• Be sure to list the specific Discipline Codes you seek within your RFP/RFLOI

• Transportation Planning codes start on page 56• Discipline Code listing

– Tran Planning – page 56– Bike/Ped – page 100

• RFLOI template

Preparing RFP/RFLOI

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NCDOT Local projects administration web page

A note on Discipline Codes (use in RFLOI)• List the work codes that the consultant should be

prequalified in by NCDOT. There is a choice as to whether the consultant (or team of consultants) should be prequalified in ALL work codes or ANY COMBINATION of work codes. – If ALL, then the LGA should reject any submittal as “not

responsive” if any of the work codes is missing. – If ANY COMBINATION, then the LGA has some flexibility to

evaluate the consultants, even if they are not prequalified in all work codes

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NCDOT prequalification• Be sure your consultant is pre-qualified with NCDOT

– or needs to obtain prequalification status prior to contract execution

– Pre-qualified to do the work under a given discipline code.• Sub-contractors also ALL need to be pre-qualified.• PREQUALIFICATION SEARCH PAGE

– Enter firm name and look for the discipline codes they are prequalified to perform.

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Review of DRAFT cost proposal• Per Federal regulations, NCDOT requires that your draft

cost proposal has been reviewed by NCDOT’s OIG office to compare proposed rates vs approved.– Provide a draft cost proposal to your TPD coordinator.– Your TPD coordinator will submit the cost proposal for OIG

review, and transmit any findings to you.– Have your consultant address the comments and provide a

new draft contract with the changes to your TPD coordinator.

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Can TPD review draft cost proposal?• Generally, TPD staff is to send the cost proposal to

NCDOT’s Office of Inspector General (OIG) for review.• In rare circumstances, TPD can review.

– Consultant must have voluntarily provided data in the CRS system, otherwise OIG must conduct the review.

– Request from TPD Director -- Explain the circumstance.• Prime and all subcontractor rates must be reviewed.• Review letter should be submitted along with first study

invoice for NCDOT reimbursement.32

Why OIG review—23 CFR172.11Allowable costs and oversight.

• b(1) Indirect cost rates. (i) Indirect cost rates shall be updated on an annual basis in accordance with the consultant's annual accounting period and in compliance with the Federal cost principles.

• FHWA Policy (order 4470.1A)– FHWA Policy for Contractor Certification of Costs…

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Format for proposed contract costs

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These items vary from firm to firm

* Note – not all firms have an overhead rate.

Consultant may use:NCDOT Scope and Mandayestimate form-sometimes referred to as the “kitchen sink” spreadsheet

Maximum allowable non-

salary direct costs*This memo is periodically updated with

the latest rates, which may cause the link to not function. A simple internet search

will find the latest version.

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Car Rental Rate Includes Tax

Independent Cost Estimate/Contract Cost• CFR 200.323

– a) “…the non-Federal entity must make independent estimates before receiving bids or proposals.”

– d) “The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used.”

• Use Lump Sum

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Independent Cost Estimates• Selected consultant sends blank cost sheet – except

that staff names and hourly wages should be populated• LPA uses this information to estimate manhours and

thus total cost. • PEF to develop their estimate, and LPA to develop one.• Then, LPA may use theirs, the PEF’s, or a new one as a

result of negotiation.

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Reminder – Federal Contract Provisions• Once the cost proposal is approved by NCDOT’s OIG

office, and you receive TPD approval, then (and only then) present for governing body action / signature to enter into contract.

• TPD cannot review for required federal provisions.• Contract Provisions (all contracts with Federal Funds)

– This does not contain the exact language of all the provisions.– That must be determined by your LPA’s legal representation.

• The legal burden is upon (sub)recipients of federal funds to follow all federal regulations.

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Contract Provisions• Refer to Appendix II to Part 200 – Contract Provisions

for Non-Federal Entity Contracts Under Federal Awards

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INVOICING• This applies to:• Invoices from consultants to LPA• And, Invoices from LPA to NCDOT

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Invoicing 101• Purchase Order (PO) – official confirmation of an order.

A document sent from a purchaser to a vendor that authorizes a purchase. (PWP approval letter)

• Invoice – request payment for a purchase• WBS – work breakdown structure – a breakdown of

projects (all MPO’s) into smaller components (your MPO).– Consider it a bank account number for a given FY or project.

• You will receive new WBS and PO numbers every fiscal year. 41

Invoice contentsInvoice package to NCDOT must contain:

1) Cover letter with PO and WBS numbers.– Total amount spent during invoice period– Net amount to be reimbursed for each WBS number.

2) Signed certification (by accounting manager)3) Proof of payment(s) (for contractors, items, etc)4) Statement/description of work performed

– Include any consultant invoices and their statements of work5) DBE form (for purchases/consultant expenses)

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Details on certain Cover letter requirements

• Invoice number

• Address on letterhead matching address on file with NCDOT’s fiscal division.

• NCDOT Key Invoice Components

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Invoice numbers: Basic RulesOn the cover letter to TPD:

• Less than 16 characters• Use a unique invoice number (each fiscal year) for each

invoice you send to TPD. • No special characters (letters and numbers only)• Don’t use the same invoice number twice in a given fiscal

year.• If applicable, use the invoice number on the invoice

generated by your LPA (accounting department)44

Invoice number examples• Otherwise, create a logical number, for example:• Example invoice number: • Invoice 1• Invoice FY20Q2SPR, FY20Q2PL, FY20Q3DA,

FY20Q4SPR, • Invoice FY20Q2 (if only 1 funding source)• Invoice 20191215 (year/month/day)

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Address on letterhead (invoice)• Address on invoice must match address in SAP system.• If LPA needs to change address or name of organization

in NCDOT’s system -LPA must fill out Substitute Form W-9 --(aka: Vendor Registration Form)

• Until the form is approved or if address on your letterhead doesn’t match what’s on file with NCDOT, add to invoice (either cover letter or certification):– Remit check to: (address on file in NCDOT’s SAP/financial

system).

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Generally Accepted Accounting Principles, or GAAP

• Per GAAP cost principles, an invoice should:– For 1 month of consultant or RPO work:– State the time period being billed.

• Ex: “…for work performed from Jan 1, 2020 – Jan 31, 2020.” – Be dated after the time period of work being invoiced.– Only include costs incurred for work done during the month

being invoiced.– Include specific meeting dates and title of meeting.– Proof of payment (for counters, consultant payments, etc)

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Common invoice errors• $ Amount in cover letter does not correspond to $

Amount in the table or back-up documentation.• Failure to describe work accomplished or what the

funds were expended on. (applies to PWP also)• Dates in the Invoice or Cover Memo are incorrect.

– Dates of invoice period is incorrect. Invoice for month of January can not have activity in December or Feb.

• Certification not signed by LPA’s Financial Officer.• Amount in PWP or invoice is greater than amount

available. (or more than variance limits)48

Common errors page 2• Wrong PO and/or WBS numbers.• Not specifying dollar amount to be applied to which

WBS/PO number (for those that have multiple WBS).• Forgetting to remove taxes paid from total expenses

calculation.

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MPO/RPO invoices to NCDOT – basics• Date of invoice should be after period of performance.• Invoice for Federal funds must be for 80% of your

quarterly expenditures. (spend 100%, invoice NCDOT for 80%)– Make sure your invoice is for 80% of the amounts of any

attached consultant invoices. (unless you’ve paid another municipality the 80%, and asking reimbursement for that 80%)

• Mileage/Hotel/meals – please indicate the date and location of the meeting– Ex: “Mileage for SPOT workgroup meeting in Raleigh, Sept 1,

2017” 50

NCDOT has a standard invoice form for consultant use

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Link to NCDOT’s standard invoice form (Excel):

MPO/RPO – aim for 30-day to process consultant invoices

• Recommended to follow State guidelines:• Consultants submit invoices within 30 days from the

performance period, and paid within 30 days from receipt.

• NCDOT memo regarding invoices and payment within 30 days

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DBE-IS form is required(if consultant / vendor used that quarter or invoice period)

• List payments to consultants (or vendors) that occurred in the quarter.– Includes any payments from LPA to MPO-member jurisdictions

• (for MPO eligible work they may be project managing)

• Be sure the form is signed.– (certifying the payments listed are accurate)– PDF of DBE-IS form

• Only needed with invoices containing payments to consultants or vendors

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Example DBE-IS form

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Redacted for privacy

Redacted for privacy

Obtain PO and WBS numbers from TPD

each FY

Be sure to sign and date

Proof of Payment• Evidence of Payment • Copy (front and back) of cancelled checks, or • Copy of bank statement showing where checks have

cleared, or • A certified EBT (Electronic Benefits Transfer) statement• 2CFR200.302 “…and the tracing of funds to a level

of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. ”

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Required by Federal regulations-2 CFR 200• 2 CFR 200.302(b)(4) Financial Management

– The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See §200.303 Internal controls.

• 2 CFR 200.400(d) Policy Guide• …the accounting practices of the non-federal entity must …provide for

adequate documentation to support costs charged to the federal award.

• 2 CFR 200.53(b) Improper Payment – … any payment where insufficient or lack of documentation

prevents a reviewer from discerning whether a payment was proper.

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Invoice detail requirements

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*there are variance rules in the procedures*

Invoice checklist1) Is invoice for 80% of total expended?2) Invoice follows GAAP principles? (date of invoice,

period of performance, etc) 3) Are there enough funds in the task code?4) Description of work and consultant invoices attached?5) Project in UPWP and funds / fund source identified?

1) Ex: If purchasing a traffic counter, is this noted in PWP task description?

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Invoice checklist, page 26) Proof of payment attached? 7) Taxes removed from total?8) DBE-IS form attached (and signed)?9) Invoice #, PO, and WBS in subject line?

• STBG-DA, SPR, and PL funds have different WBS numbers (each fiscal year)—properly identify so correct invoice amount is applied to proper WBS number.

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Invoice checklist – page 3• If requesting reimbursement for consultant work:• On the first invoice reimbursement request to

NCDOT, include the OIG review letter for the study/project.– This will keep this vital piece of documentation stored in

NCDOT’s payment system and help you with audits.– Don’t need to resend with subsequent invoices for the study.

• (in addition to the usual consultant invoices, statements of work, DBE form, and other invoice elements, etc)

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Elements of a good invoice cover letter

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FY, WBS, and PO# in subject

Details of each WBS / funding source.

In this example, there is only 1 PO

number. Total expended is X. 80% reimbursement is Y.

Be sure to mention the reporting period of <start date> to <end of

date of reporting period> (typically one quarter)

Could also submit as 2 separate invoices. (one per WBS

number)

Total reimbursement this invoice

Invoice #

Cover letter errors• If the cover letter is inaccurate in some way TPD can not

process. If there are errors, you must resubmit the invoice package with a corrected cover letter.

• Typical errors on the cover letter– wrong WBS, – wrong PO, – wrong period of performance,– wrong reimbursement amount (doesn’t match spreadsheet).

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Invoices to NCDOT – request by funding source• Invoices to NCDOT (PWP also) need to have

description of work and who did the work (consultant or RPO staff)–In the PWP: who will do the work.–On the invoice: who did the work.

• On the invoice to NCDOT…Each funding source needs to be identified and request reimbursement from each source, as applicable.– Each funding account requires separate documentation, proof

of payment, description of work accomplished (for those particular funds), etc.

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Multi-funding source example expenditure report (could also submit separate invoices)

UPWP / PWP

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PWP- What’s wrong with this?

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What is the study? Need to provide detail and cost of each study.

What’s wrong with this PWP task description?

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Doesn’t identify an individual study! This is not an acceptable study description.

Each special study needs to be itemized

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Another exampleTitle of each study is listed with cost estimate!

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Each study is listed in corresponding funding category.

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Yet Another Example Each funding category shows funding % and total.

In PWP: Total funds by funding source(have 20%, 80%, and 100% columns)

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Make sure UPWP has these 3 columns for PL, STBG-DA, (and SPR if applicable) (for all funding sources)

PWP project description.What’s wrong with this?

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Should say: “The City of xxx will acquire a consultant..” or “A consultant will be used to ….”

23 CFR 450.308• “The UPWP shall identify work proposed for the next 1-

or 2-year period by major activity and task (including activities that address the planning factors in §450.306(b)), in sufficient detail to indicate who (e.g., MPO, State, public transportation operator, local government, or consultant) will perform the work, the schedule for completing the work, the resulting products, the proposed funding by activity/task, and a summary of the total amounts and sources of Federal and matching funds.”

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Task code variance*• RPO:

– A variance of up to $5,000 compared to current programmed amount for any category in the PWP is considered a minor revision and is allowed without amendment if approved in advance by the TPD RPO Coordinator. (per RPO manual)

– NCDOT staff will send e-mail to RPO with revision approval.• MPO

– A difference of 100% or 2,500, whichever is less, may be allowed if approved in advance by the TPD MPO Coordinator

– (per NCDOT procedure for MPO invoice processing)

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PWP Revisions• Revisions to PWP can only occur for the current fiscal

year PWP.• Can’t change PWP for previous fiscal years.

• Can’t submit revisions for last (fiscal) year’s PWP when turning in 4th quarter invoice in August.

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Various Regulations and guidance

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Equipment• §200.439 Equipment and other capital

expenditures.• (1) Capital expenditures for general purpose

equipment, buildings, and land are unallowable as direct charges…”

• §200.48 General purpose equipment.• “Examples include office equipment and furnishings,

modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles.”

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Taxes• NCDOT does not reimburse for sales tax.• In NC, Governmental Entities obtain reimbursement for

taxes they paid via a different reimbursement mechanism (NCGS 105-164.14)

• Thus, be sure that taxes are not submitted for reimbursement in your PL/STBG-DA/SPR invoices.

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Sole Source?• Generally, a rare occurrence.• Competition for goods may be waived under certain

conditions. (NCDOT’s purchasing manual)• For example, where a needed product is available from

only one source of supply.• Email me if you want an example waiver request.

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What’s a project?• Transportation planning examples:

– Ex1: FY19 STBG-DA funds for <insert name>MPO– Ex2: FY20 PL funds for <insert name> MPO– Ex3: FY21 SPR funds for <insert name> RPO– Ex4: SPR-funded study X

• ALL Projects have a) (Federal) Authorization dates: Work on the project can begin.b) End dates: Work must be completed by this date.

• Work done/invoiced outside of these dates can not be reimbursed with Federal funds.

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Finished with a project (the fiscal year)?• (When a specific (individual) project (ex: FY20 SPR-

funded RPO operations) is completed, indicate in your invoice cover memo to TPD that this is the final invoice for the project (for the fiscal year in this case).

• Dear TPD staff• Ex: “This is to notify you that this is the final invoice and therefore request

closure of the FY20 xxxRPO WBS number of 1234.5.6.”• Ex: “This is the final invoice for FY20, and request TPD staff to close out

the FY20 xxxRPO WBS number 1234.5.6.”• If you have any questions, please contact <RPO staff contact>.• Sincerely,

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Project Funds Management Guide for State Grants (FHWA)

• The primary points of this guidance include:• The project authorization must reflect the Federal funds needed based on an accurate cost estimate

for the scope of work that is ready to proceed for an allowed purpose.• An obligation is proper when supported by a documented binding agreement supporting the amount

of Federal funds recorded to reflect the Federal Government's potential liability.• A reasonable period of performance needs to be established in which the recipient is to incur eligible

costs on the project.• Projects must be monitored to ensure Federal funds and project agreement estimates reasonably

align with current cost estimates and the performance schedule.• Obligations should be adjusted and projects should be closed within a reasonable timeframe after all

required work and applicable administrative actions (e.g., reporting and final billings) have been completed.

• The period of performance must be monitored to ensure cost are incurred during the authorized period and billed as provided in the regulations.

• Records must be properly retained by the recipient or subrecipient in accordance with the regulations. 82

Records Retention• 2 CFR 200.333• “Financial records, supporting documents, statistical

records….must be retained for a period of 3 years from the date of submission of final expenditure report…”– means 3 years AFTER NCDOT closes the project with

FHWA. (ie, after NCDOT closes the federal project)– There may be multiple WBS numbers assigned to single

federal project– Therefore, federal project closure may occur after a long time

period after your final invoice was submitted.• 200.333(f) “…applies to indirect cost rate proposals…”

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A note on records retention --Closing out the fiscal year

• Remember that item from the previous slide?• Please note: Closing out the fiscal year in NCDOT’s

SAP financial system does not coincide with closing the project on the federal level.

• In other words:• Keep your project records longer than you think.

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Inactive funds?• Federal funds must be used effectively, and unused

funds must be de-obligated to minimize misuse.• Inactive projects = project with no activity (invoicing) will

be quickly closed and deobligated!• Project is flagged after 6 months of no activity, and

project closure process begins at 9 months.• On a quarterly basis, NCDOT reviews inactive projects.• IT’S IMPORTANT TO INVOICE NCDOT QUARTERLY!

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Miscellaneous reminders• PWP is to the nearest dollar• Invoices are to the penny.• PL and SPR funds are a REIMBURSEMENT program.

You must spend 100% of costs first, then invoice NCDOT for reimbursement of the Federal 80%.– PL and SPR are not a “grant” program. It’s a reimbursement

program.– Must show proof of expenditures (for procured items/services)

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(200.302 (a) Financial Management)• LPA’s need to provide PROOF that the LPA payed

the consultant or equipment vendor• “…tracing of funds to a level of expenditures adequate

to establish that such funds have been used according to the Federal statutes…”

• Provide scanned copy of cashed check issued by LPA to consultant/vendor in your invoice to TPD. (or other form of proof of payment)– See also 200.502 - Basis for determining Federal awards

expended87

Indirect Costs

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Federal-aid Essentials for Local Public Agencies• FHWA resource with information and resources.

• Understanding cost allocation and indirect cost rates– Good info from Rural Community Assistance Corporation

(RCAC). 89

Unfortunately, the companion guide is from 2012 (outdated)• References outdated

regulations

Indirect cost options3 Options1. De Minimis (Flat Rate) of 10% (200.414(f))

• Of modified total direct costs (defined in 200.68)2. Cost allocation plan3. Don’t invoice indirect costs

90

De Minimis Rate• If LPA elects to use the 10 percent de minimis rate, the

Uniform Guidance requires that you use Modified Total Direct Costs as the cost base.

• Need to understand allowable costs and have an accounting system to properly account for direct and indirect costs

• Should have internal policies and procedures to manage and provide assurance (and consistency) that a cost is not being applied to both direct and indirect simultaneously.

• This rate must be applied to all Federal awards. 91

Indirect cost allocation plans• (If this is the agency’s choice for charging indirect costs) • Each major local government (LPA) is required to submit

a plan to its cognizant agency (NCDOT in MPO/RPO’s case) for indirect costs annually.

• MPO/RPO invoices to TPD need to present the indirect cost on the invoice, if applicable.

• Sample cost allocation plan template (Dept of Interior)• Cost allocation plan webinar training presentation

– (Florida Government Finance Officer Association)92

Indirect cost allocation plans• 2018 RPO manual• (a) Indirect Cost Allocation Plan

• Each RPO is required to annually submit current fiscal year's Indirect Cost Allocation Plan to designated NCDOT staff by February 28th, along with draft PWP. This plan is different for each RPO. The fiscal director for the RPO should know what this plan is and work with you. Indirect costs are allowable with the submittal and approval of an indirect allocation plan. NCDOT will accept the indirect cost rate of the RPO approved by the cognizant agency. The Indirect Percentage Rate approved for use in the PWP cannot exceed the percentage rate approved by the Cognizant Federal Agency. If an RPO does not have a cognizant agency letter, NCDOT will approve or negotiate an indirect cost rate based upon the indirect cost plan. 93

Indirect cost allocation plans• Indirect Costs Annual Requirements due with draft PWP

(February 28) – 1) Cognizant Federal Agency Letter approving/acknowledging

Indirect Cost Rate – 2) Cost Allocation Plan (or documentation/worksheets

supporting the calculation of the Indirect Cost Rate) – 3) Certificate of Indirect Costs

• An LPA may choose to not charge indirect costs.

94

Budgeting indirect cost• Assume rate of 1.234%• Total Allocation $50,000 • Less capital outlay and subcontracts (5,000)• Amount available for other expenses 45,000• Amount subject to indirect cost 44,451• ($45,000 divided by 101.234%) _________• Budgeted amount for indirect cost $549

95

Verification• Amount subject to indirect cost $ 44,451• Indirect Cost rate X 0.01234• Maximum indirect cost for this

project as currently budgeted $ 549

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Resources, page 1• FHWA regulations regarding consultant services• NCDOT eSignature Policy• Doing Business with NCDOT-consultant forms

– (includes DBE form, NCDOT scope and manday estimate form, Invoice template, RS-2(prime), RS-2(subconsultant)

– Consultant Rate System-May 22, 2019 update • Steps for firms to prepare for the CRS

• NCGS 159-34 (State law requiring use of GAAP)• Maximum allowable non-salary direct costs

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Resources page 2• NCDOT Discipline Codes • NCGS 143 Article3D procurement of engineering

services• 23 CFR 172 (Procurement, management, and administration of engineering and

design related services)

• 2 CFR 200• TPD procedure for Procurement of consultant services

by MPO/RPO’s.• Prequalification search

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Resources, page 3• 2018 RPO manual (updated Jan, 2020)• MPO and RPO administration manuals• FHWA Order 4470.1A Policy for Contractor Certification

of Costs• Contract Provisions (for contracts using Federal Funds)• NCDOT memo regarding invoices and payment (within

30 days)• RFLOI template• Vendor Registration Form (substitute form W-9)

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Resources, page 4• Accounting Standards Codification: The FASB’s

centralized reference tool for GAAP• FASAB Handbook: Standards & guidelines for financial

reporting at federal government organizations– an approximate 2,500-page PDF

• FHWA Consultant Services • NC Treasurer - Compliance Supplement page.• NCDOT procedure for MPO invoice processing• NCDOT’s purchasing manual (for non-PEF procurement)

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Resources, Page 5• Federal-aid Essentials for Local Public Agencies• Understanding cost allocation and indirect cost rates• FHWA’s Project Funds Management Guide for State

Grants• Sample cost allocation plan template (word doc)• Cost allocation plan webinar training presentation• Key invoice components (NCDOT Fiscal)• MPO Allowable Expenditures

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Resource, page 6• NCDOT – IPD – Professional Engineering Firm

Management – Guidance for Project Managers• 2 CFR 200 (Updated sections to 2 CFR 200)

– UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS

– Formerly: • 44 CFR PART 13 • 2 CFR 225 Cost Principles for State and Locals • OMB Circulars A-87, A-102, A-133 • Federal Program Guidelines

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Resource, Page 7Mini-Brooks Qualifications Based Selection

• North Carolina “Mini-Brooks” – G.S. 143-64.31 et seq. – Became law in 1987 for the procurement of architectural and

engineering services based on qualifications. • Applies to State and Local Governmental Units.

– Announce (advertise) – competitors' qualifications are evaluated and the most

qualified competitor is selected– price is not used as a selection factor

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Resources, Page 8 – Audit info• On the Schedule of Expenditures for Federal and State

Awards include program name and CFDA number.• MPO’s: Metropolitan Planning/ PL 104(f) funds – CFDA

Number (20.205-5)– https://files.nc.gov/nctreasurer/documents/files/SLGFD/LGC/LocalGovFiscalMn

gmt/AnnualAud/2020ComplianceSupp/20.205-5.pdf

• RPO’s: SPR funds (RPO program) - State Planning and Research – RPO program - CFDA Number (20.205-8)

– https://files.nc.gov/nctreasurer/documents/files/SLGFD/LGC/LocalGovFiscalMngmt/AnnualAud/2020ComplianceSupp/20.205-8.pdf

• NC Treasure’s Compliance Supplement page:• https://www.nctreasurer.com/divisions/state-and-local-government-finance-

division/lgc/local-fiscal-management/annual-audit 104

STBG-DA section• This part only pertains to MPO’s that receive STBG-DA

funds (greater than 200k in population)• (and choose to flex those funds for planning purposes)

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STBG-DA funds--Did you modify UPWP?• If you are adding additional DA funds (for planning

purposes), you need to coordinate with NCDOT STIP unit so they can amend the STIP for the new/additional amount. You MUST also let various TPD staff know (see below)

• MPO Checklist:– Did the MPO contact NCDOT’s STIP unit to modify the STIP

for additional STBG-DA funding amount?– Did the MPO modify the TIP?– Did the MPO modify the UPWP? 106

Process to authorize additional STBG-DA funds for planning purposes

1. Once your UPWP, TIP, and STIP are amended, then MPO’s must email a PDF copy of all 3 items to:– Jamal Alavi – jalavi@ncdot.gov– Your TPD coordinator– Daryl Vreeland – dvreeland@ncdot.gov

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STBG-DA funds authorization process pt22. TPD will then use the modified UPWP and TIP and seek

federal authorization of the modified amount.3. Important note: Funds MUST be federally authorized

and available for use to the MPO PRIOR to the MPO beginning any work using those funds.

a) Remember that FHWA must approve the UPWP amendment, so allow additional time before encumbering dollars.

4. Please work with your TPD coordinator to check the SAP system to determine if the funds have been authorized. (There’s no automated notification system).

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UPWP how-to amend summary• Prior to using any funds in amended UPWP:• MPO staff must ensure UPWP has been approved by

FHWA• MPO staff is responsible for ensuring that funds have

been federally authorized PRIOR to the MPO encumbering those funds.– Otherwise the MPO will not be able to receive federal funds

for unauthorized work.

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What happens to unused DA funds (those used to supplement PL planning)?

• If the MPO has flexed DA funds for planning purposes, and some of those remain unspent….

• When the “project” (the bank account for the fiscal year) is closed, those funds go back to the MPO’s Federal DA fund account.

• Upon closure, the STIP unit will be able to see the new, (higher, in this case) balance of the MPO’s DA funds.

• TMA MPO’s can not “lose” DA funds (those funds supplementing planning/PL) because they were unspent – (unless rescission or some other action) 110

Finished with a FY of DA funds?• (When a specific (individual) project (ex: FY20 STBG-

DA project year) is completed, indicate that in your invoice cover memo to TPD that this is the final invoice for the project.

• Dear TPD staff• According to our records, the final invoice for <project> has been paid and

all deliverables have been met. This is to notify you that we request closure of the FY20 xxxMPO STBG-DA WBS number 1234.5.6.

• Or add this line to the final invoice cover letter “This is the final invoice for WBS 1234.5.6 (xxxMPO FY20 DA funds). Please close out this account”

• If you have any questions, please contact <MPO staff contact person>.• Sincerely,

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Thank you

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• Any Questions?

Change log

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